How to Price Your Accounting Services Effectively

Accountants and bookkeepers often feel burdened with setting a pricing model for accounting and bookkeeping services. This happens because the older hourly-based pricing is no more appreciated by clients who find it difficult to budget the entire expense in one shot. In addition, the uncertainty of the number of hours you work makes the client underappreciate your efforts.

So what is the solution to provide the best accounting services that keep you profitable while also accounting for your client’s budget?

Many pricing methods can help you sell your services according to the value they generate for your clients. However, you need to stick to the pricing method that best reflects the value of your accounting firm.

Let’s find out in this blog. But first, let’s look at why the traditional way of hourly pricing does not work anymore.

Why Hourly Based Pricing No More an Option?

This pricing concept involves billing your client for the hours your firm spends on their work. While this pricing model is a norm for most accounting firms worldwide, it has been proved to not work anymore. Clients want to pay for the services now and not for the time that an accountant or bookkeeper spends on their work.

It’s not just the clients; even the employees working at these accounting firms have realized that billable hours lead to more working hours and serve as a criterion for measuring performance. Businesses also want to know the estimated price of the services offered by an accounting firm in advance. They want to have an excellent work-life balance.

All of this has led to the increased usage of two pricing models that are serving the employees at the accounting firm and the clients better.

Two models that can help you price your best accounting services effectively.

Value Pricing

A firm fixes a pre-determined price for its services in the value pricing method. This also means they are charging their clients for the services provided and not for the number of hours their firm spends on delivering them.

In this method, your firm decides on tailor-made pricing for a business based on its needs. Your firm is simply adding “value” for the client, which can be charged based on what the client is comfortable with. This signifies that you can assign different sums to clients depending on the number and type of services they require.

The trick is understanding how to price your accounting services based on value pricing. The best way to do so is to have an in-depth conversation with your client and understand their needs, preferences, deadlines, and the expertise they are looking for. After gaining an insight into their bookkeeping situation, you can decide what price is best for the services they require.

It does two things for your client:

• It gives them an upfront knowledge about their expense in accounting.
• helps them appreciate your work more since they have already agreed upon a fixed price.

However, there are a few demerits of this pricing method. These are:

• There is a danger of underpricing your services.
• You may end up repeating this process for every client . This becomes a complex and time taking process.

Cost Plus Pricing

Another great way of pricing your best accounting services is using cost-plus pricing. This primary method involves charging your clients a fixed cost for offering your services and adding a small percentage of profit. It is also known as markup pricing and is more profitable for firms providing services than real products.

It differs from flat pricing as the amount can go up depending on the final price you charge your client. This method, too, has its benefits and limitations.

The benefits of cost-plus pricing are:

• It is easier to implement and more accessible for the client to understand.
• May increase your profits if you can control your expenses on your services.

The limitations of this pricing method include:

• It does not account for the pricing offered by your competitors. This can lead to your clients shifting toward them.
• The cost plus pricing may sometimes fail to capture the actual value of your services. The client may be getting more out of your services than you are getting paid.

To Sum It Up

Many pricing methods can help you sell your services according to the value they generate for your clients. However, you need to stick to the pricing method that best reflects the value of your accounting firm.

For example, if your firm prides on simplicity, offer a transparent fee structure that helps your client see precisely where their money is going. If your firm deals with wealthy clients, charge for the exceptional and priority-based pricing you provide them.

Want to find the best pricing services that can work long-term and provide profitability and safety?
Consult us.